ISyE 3101C

Supply Chain Modeling: Logistics

Exam 2

J. Vande Vate

This is an open-book, open-notes exam. Your answers should be your own. Be sure to put your name on your exam and write your answers clearly.

  1. A furniture manufacturer sells a line of desks with a common general design. The desks are made from veneered plywood sheets. The purchasing plan for these sheets is to be determined for the next 7 weeks. The desks come in three styles, each with minor modifications in the drawer layout. Marketing forecasts for the three styles are given in Table 1.

It takes one week to produce the desks, with a production run of 300 for style A and 100 each for styles B and C. Currently, 80 style B desks and 200 style C desks are on hand. Current production plans will make available 300 style A desks in week 1. None are currently on hand. No production is currently scheduled for styles B and C. All other parts are readily available.

Each desk requires three veneered plywood sheets. There are currently 2,400 sheets on hand and 600 more are to be received in week 2. It takes, on average, 2 weeks to obtain a plywood order once it is placed. The company places orders for 1,000 sheets (the minimum order quantity) unless larger orders are absolutely necessary. The company maintains no safety stock of veneered sheets.

Suppose the costs for delaying production are $1 per day for each plywood sheet that has not arrived in time to meet production needs. The cost for carrying plywood in inventory is $0.17 per sheet per day. The average order cycle time on purchase orders is 14 calendar days with a standard deviation of 2 days. The lead times are (discrete) uniformly distributed between 11 and 17 days. What lead time should the company use in ordering plywood sheets?

  1. The Wagner Company supplies electric motors to Electronics Distributors, Inc. oon a delivered-price basis. Wagner has the responsibility for providing transportation. The traffic manager has three transportation service choices for delivery: rail, piggyback and truck.

Electronics Distributors purchases 50,000 units per year at a delivered price of $500 per unit. Inventory carrying costs for both companies are 25% per year. Which mode should Wagner select to minimize system costs?

  1. The Sunshine Bottling Company bottles soft drinks and distributes them to retail outlets from nine warehouses in the Michigan area. The company operates a single bottling plant in Flint, Michigan. It wants to develop a single model to simultaneously determine the shortest path from Flint to each of the warehouses. The distance in one direction is the same as the distance in the other (so only half the distances are listed in the following table):

Formulate a Solver model that will to simultaneously determine the shortest path from Flint to each of the warehouses. To do this, fill out the cells of the spreadsheet with relevant data and formulas.

a)Which is the target or objective cell? Are we minimizing or maximizing it? Identify the cell by its row and column as you would in Excel.

b)Which are the adjustable cells or cells solver can change? Identify a range of cells by their upper left corner and lower right corner as you would in Excel.

c)Write down the constraints. Express the constraints as you would with Solver.

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  1. A company uses a load driven system to distribute customized products in a pure pull manner. (The products are made to order and so are destined for a specific customer when they are made). It distributes the goods in truckload quanities of 500 units from 4 plants to 10 wholesale outlets. The average time on the road from plant to wholesale outlet is 3 days. The company produces 500,000 units per year with an average value of $1,000 each. Inventory carrying costs are calculated at 30% of the value of the goods per year.

a)What is the carrying cost for pipeline inventory in the system including products on the road and at the plants awaiting shipment?

b)Routing all shipments to its wholesale oulets through a single crossdock increases the average time on the road (excluding time spent at the crossdock) to 4 days. What effect will this have on the carrying cost for pipeline inventory (including product on the road, at the crossdock and awaiting shipment at the plants?